Financial institutions have established various processes and associations related to the exchange of documents evidencing monetary transactions. Such documents have historically been encoded with magnetic ink so that information from the documents can be read by machine. Such documents have thus become known as magnetic ink character recognition (MICR) documents. Check processing and sorting systems have also been developed in which a check or similar MICR document has its image captured and stored electronically. Such an image can be archived so that it is indexed with its accompanying data from a MICR read. During this image capturing process it may be realized that the image captured is unusable for reasons such as poor quality of the paper document or operational oversight. In such a case, a stored image of a “surrogate” document is inserted in place of the scanned image. This surrogate image acts as a placeholder and if viewed or printed would contain a readable explanation as to why the image of the check is not available.
As long as images of checks or similar documents were used by financial institutions primarily to supply records to customers, or for archival purposes, the presence of surrogate images had no serious ramifications for the check clearing process. However, legislation has authorized banks to do away with the use of paper for settlement and reconciliation of accounts between banks. In the United States for example, this legislation is referred to as “The Check Clearing for the 21st Century Act” or simply “Check 21” and authorizes the use of electronic records for presentment from one bank to another as long as the images in the electronic records actually represent any original paper documents. In cases where a paper document is needed, the legislation authorizes a bank to create one in the form of a “substitute check.” A substitute check contains an image of the front and back of the original check, as well as a MICR line that can be read by standard MICR equipment. The substitute check carries with it the full faith and credit formerly attributed to paper checks, as long as it meets the standards specified in the legislation.
Because a surrogate document image contained in a bank's check imaging system cannot be used to satisfy the requirements of legislation such as Check 21, its presence in the system must be documented and monitored. In at least some installations, this tracking is accomplished by maintaining audit listings, which are then in turn passed to applications that need to differentiate between surrogate image documents and actual check images.